Data is the new gold. With the importance of the cyber world and data economy rising, are the companies enabling themselves to reap the full benefits?
Data is growing at a meteoric rate. The total volume of data generated by 2025 is set to accelerate exponentially to 175 zettabytes. And over the next two years, enterprise data is expected to increase at a 42% annual growth rate. Hidden within these vast volumes of data are insights into consumer behaviour, emerging market trends, and even predictors of the future, yet most companies are unable to tap into this opportunity right in front of them.
A missed opportunity
For organizations, the goal is to make sense of this rapidly increasing amount of data and find innovative ways to derive sustainable value from it, all while efficiently managing the consumption of the cloud services that support data management and analysis. Yet according to a survey of 255 business leaders and decision-makers conducted by MIT Technology Review Insights, 45% of respondents say they use data for only basic insights and decisions – that’s a missed opportunity. A data economy has evolved, that is growing rapidly, encompassing every aspect of our lives and businesses.
The data economy
The data economy is the global digital ecosystem in which the producers and consumers of data—businesses and individuals—and government and municipal agencies gather, organize, and share accumulated data from a wide variety of sources. By connecting unconnected data across industry boundaries, organizations can glean richer business insights, tap into unexplored markets, serve citizens and consumers alike with data-driven products and services, and monetize their data by sharing it externally with key customers and suppliers.
Sharing data, creating value
Fortunately, over a third (35%) of survey respondents are collaborating with partners to exchange data. This sharing of data assets is helping organizations unlock value and achieve significant business outcomes. For instance, 66% of those sharing data assets are experiencing improved collaboration with partners and vendors. It’s easy to understand why. Data exchanges and marketplaces provide multiple stakeholders with a secure and reliable platform for gathering and sharing information in real-time.
Building new business models
More than half (53%) of business leaders say that participating in the data economy has led them to create new business models. For example, using internet-of-things enabled monitoring devices, Telstra delivers applications that convert waste, water, air, soil, and noise data into actionable insights. By combining this data with micro-climate data gathered from weather stations, the company plans to provide Australia’s agricultural industry with information that can be used for a range of activities, from predicting the health of crop yields to determining pesticide use.
Another benefit of the data economy is faster innovation, according to 52% of survey respondents. Traditional companies are facing unprecedented pressure from their digitally native counterparts to innovate and respond quickly to evolving customer preferences and market trends. By harnessing data from a wide variety of external sources, organizations can discover innovative approaches to designing products, delivering services— and even solving the world’s problems.
For example, credit card companies could work with healthcare organizations, cell phone carriers, and e-commerce players to use their integrated data to track covid-19 patients and provide them with care in ways that would not have been possible as single entities with siloed data sets.
Improving customer retention
In addition to creating new business models and driving innovation, more than half (51%) of survey respondents say participating in a data economy can improve rates of customer acquisition and retention—gaining new customers and retaining current ones—while 42% of respondents cite increased revenue as an important business benefit.
The challenges – data security, regulations
But embracing data-driven opportunities requires overcoming certain obstacles. Chief among these challenges is sharing data securely—a concern among 24% of respondents. And for good reason: security risks such as data theft, data leakage, denial-of-service attacks, and technology vulnerabilities can multiply in shared environments. At the same time, companies must comply with mounting legal obligations to protect personal and confidential data.
Cybersecurity isn’t the only reason 21% of survey respondents cite building a platform to support a data ecosystem as an obstacle. Democratizing access to data and unlocking value across silos among partner data sources require the scale and performance of the cloud.
Although only 13% of survey respondents cite adhering to data privacy laws as an obstacle to taking advantage of data-driven opportunities, this figure is likely to increase as today’s regulatory climate becomes increasingly complex, especially across multiple geographies.
Although MIT Technology Review Insights’ survey findings indicate a keen interest in participating in the data economy, there’s plenty of room for improvement. Companies need to conduct an honest inventory of their data strengths and weaknesses, establish the proper organizational structure, and incorporate the necessary expertise. With these building blocks in place, they can move beyond simply gathering and storing data in the cloud to parlaying data into innovative products and services and lucrative revenue streams.
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(Abhijit Roy is a technology explainer and business journalist. He has worked with Strait Times of Singapore, Business Today, Economic Times and The Telegraph. Also worked with PwC, IBM, Wipro, Ericsson.)
(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)